TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.

While plenty of high-yield opportunities exist, investors must always consider the safety of their dividend and the total return potential of their investment. It is not uncommon for a struggling company to suspend high-yielding dividends which could subsequently result in precipitous share price declines.

TheStreet Ratings' stock rating model views dividends favorably, but not so much that other factors are disregarded. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.

These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel — rather, use them as a starting point for your own research.

The following pages contain our analysis of 3 stocks with substantial yields, that ultimately, we have rated "Buy."

Apollo Commercial Real Estate Finance

Dividend Yield: 10.30%

Apollo Commercial Real Estate Finance

(NYSE:

ARI

) shares currently have a dividend yield of 10.30%.

Apollo Commercial Real Estate Finance, Inc. The company has a P/E ratio of 10.34.

The average volume for Apollo Commercial Real Estate Finance has been 420,700 shares per day over the past 30 days. Apollo Commercial Real Estate Finance has a market cap of $1.2 billion and is part of the real estate industry. Shares are up 6% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Apollo Commercial Real Estate Finance

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, expanding profit margins, growth in earnings per share and compelling growth in net income. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 47.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • APOLLO COMMERCIAL RE FIN INC has improved earnings per share by 5.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, APOLLO COMMERCIAL RE FIN INC increased its bottom line by earning $1.73 versus $1.26 in the prior year. This year, the market expects an improvement in earnings ($1.87 versus $1.73).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 34.9% when compared to the same quarter one year prior, rising from $19.16 million to $25.85 million.
  • The gross profit margin for APOLLO COMMERCIAL RE FIN INC is currently very high, coming in at 88.07%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 49.77% significantly outperformed against the industry average.

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BlackRock Capital Investment

Dividend Yield: 8.90%

BlackRock Capital Investment

(NASDAQ:

BKCC

) shares currently have a dividend yield of 8.90%.

BlackRock Capital Investment Corporation, formerly known as BlackRock Kelso Capital Corporation, is a Business Development Company specializing in investments in middle market companies. The fund invests in all industries. The company has a P/E ratio of 6.63.

The average volume for BlackRock Capital Investment has been 335,200 shares per day over the past 30 days. BlackRock Capital Investment has a market cap of $704.1 million and is part of the financial services industry. Shares are up 15.7% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

BlackRock Capital Investment

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, solid stock price performance and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • BKCC's revenue growth has slightly outpaced the industry average of 5.9%. Since the same quarter one year prior, revenues slightly increased by 2.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for BLACKROCK CAPITAL INVT CORP is currently very high, coming in at 88.43%. It has increased significantly from the same period last year. Along with this, the net profit margin of 64.01% significantly outperformed against the industry average.
  • After a year of stock price fluctuations, the net result is that BKCC's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Capital Markets industry and the overall market, BLACKROCK CAPITAL INVT CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • BLACKROCK CAPITAL INVT CORP's earnings per share declined by 22.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, BLACKROCK CAPITAL INVT CORP increased its bottom line by earning $1.70 versus $1.20 in the prior year. For the next year, the market is expecting a contraction of 47.4% in earnings ($0.90 versus $1.70).

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THL Credit

Dividend Yield: 11.90%

THL Credit

(NASDAQ:

TCRD

) shares currently have a dividend yield of 11.90%.

THL Credit, Inc. is a business development company specializing in direct and fund of fund investments. The fund seeks to invest in debt and equity securities of middle market companies. The company has a P/E ratio of 9.10.

The average volume for THL Credit has been 134,400 shares per day over the past 30 days. THL Credit has a market cap of $382.0 million and is part of the financial services industry. Shares are down 2.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

THL Credit

as a

buy

. Among the primary strengths of the company is its expanding profit margins over time. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • The gross profit margin for THL CREDIT INC is rather high; currently it is at 65.45%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 11.22% trails the industry average.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.9%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • THL CREDIT INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, THL CREDIT INC reported lower earnings of $1.07 versus $1.45 in the prior year. This year, the market expects an improvement in earnings ($1.39 versus $1.07).
  • The share price of THL CREDIT INC has not done very well: it is down 13.96% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • Net operating cash flow has declined marginally to $26.73 million or 6.91% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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